The tension between privacy and security has reached a critical point. Following the lead of the United States, the European Union (EU) has begun to crack down on crypto mixers and privacy coins for their ability to make cryptocurrency payments anonymous. This shift marks a significant step towards increased surveillance in the digital realm, raising concerns about the future of privacy in an over-monitored society.
The EU innovation hub for internal security
The EU Innovation Hub for Internal Security is a collaborative platform that brings together various entities within the internal security community, including Eurojust, Europol, the European Commission's Directorate General for Migration and Home Affairs, the European Council's Counter-Terrorism Coordinator, and the European Commission's Joint Research Center. This Hub recently published its first report on encryption, highlighting the complications that privacy coins and crypto mixers bring to regulatory attempts.
The first report on encryption warns law enforcement of the serious challenges posed by these technologies. This report highlights the difficulty of conducting blockchain surveillance and crypto tracing when using these privacy-enhancing tools. The EU Innovation Hub's message is clear: the anonymity provided by privacy coins and crypto mixers will hamper any regulatory efforts and complicate investigations.
Crytpo mixers and anonymous blockchain transactions
The report delves into how privacy coins, crypto mixers, and Layer 2 platforms can significantly obfuscate blockchain transactions, making it very difficult for law enforcement to trace funds.
Anonymous cryptocurrencies, such as Monero, are designed with privacy at their core, obscuring the identities of the sender and receiver, as well as the amount of the transaction. Cryptocurrency mixers, on the other hand, anonymize transactions by pooling and redistributing funds from multiple users, effectively breaking the link between the original sender and receiver. Layer 2 platforms further complicate blockchain oversight by enabling transactions that are not directly recorded on the main blockchain, making it even more difficult to trace the movement of funds.
The implications of saying goodbye to the right to financial secrecy
It means that, unlike a mere financial risk prevention with sources of one’s personal data independently used, financial privacy is about freedom protection. When it comes to the financial information, people can turn into the subject of the unwanted surveillance and profiling at any time. This kind of surveillance may originate from companies which would like to control the population by creating certain consumption patterns, or it may be perpetrated by governments, which on the pretext of protecting the people’s welfare would like to spy on financial transactions. It is also true that similar scrutiny can potentially have chilling effects, where consumers reason that they are bound by their financial decisions because they understand that there are persons factoring into their every move.
Financial privacy is therefore a fundamental human right which applies to guard every person against different nasty effects and watchful eyes. However, financial privacy is not simply a ‘nice to have’ component; it is a ‘need to have’ for different vulnerable groups and people. On a broader scale, violations of the financial privacy cause instabilities in the systems of finance. The moment people stop trusting the financial institutions to safeguard their personal information they will reduce on the economic activities they undertake which include shopping, investing through the internet and therefore paying taxes. This mistrust will also force them to look for anonymity preserving services like cryptocurrency mixer or privacy coins that conceal their monetary identity.
Moreover, the need for Bitcoin anonymizers has emerged as a sign of a more general trend of resistance to an increasing level of surveillance in the financial sector. In this way, ordinary users opting for the crypto mixer are expressing their desire for privacy and their reluctance to let all the moments of their financial lives be tracked. This means that this collective action fights for the change of the current situation and the right for privacy, protection of which is more than necessary and more than appreciated within the contemporary financial sphere.
